US threatens to increase Scotch tariffs

11th December, 2019 by Melita Kiely

The US is considering increasing tariffs on EU goods, including single malt Scotch whisky, as part of an ongoing feud regarding aircraft subsidies.

Scotch whisky ice

The US is considering increasing tariffs on EU goods, which could further affect Scotch whisky

On 18 October, the US government imposed a 25% import tariff on EU products, including single malt Scotch whisky, single malt Irish whiskey and liqueurs.

The tariffs were the result of a dispute between the EU and US over alleged “illegal” subsidies for plane manufacturer Airbus, which the US claims caused the Boeing 777, 787 and 747 aircrafts to lose sales and market share, affecting revenue for US producers and jobs for US workers.

In early December, the Office of the United States Trade Representative (USTR) said a World Trade Organization (WTO) compliance panel rejected the EU’s claims that it complied with WTO rules by making adjustments to Airbus subsidies. The USTR added that the WTO recently valued the “harm caused by these subsidies at US$7.5 billion”.

As a result, the US said it was beginning a process to assess increasing the existing tariff rates and imposing tariffs on additional EU products.

It added that tariff hikes would be focused on imports from France, Germany, Spain and the UK – “the four countries responsible for the illegal subsidies”, according to the USTR.

Robert Lighthizer, US trade representative, said: “Today’s findings confirm that, despite losing in five previous WTO reports, Europe remains more focused on generating meritless litigation than it is in addressing the massive subsidies to Airbus that continue to harm the US aerospace industry and its workers.

“The EU’s frivolous case proves that strong action is needed to convince the EU that its interests lie in eliminating these market-distorting subsidies now and in the future, so that our industries can compete on a level playing field.”

‘De-escalate trade disputes’

Trade body the Scotch Whisky Association (SWA) has reiterated the importance of removing tariffs for Scotch, which it previously warned could result in a 20% decline in exports to the US.

A spokesperson for the SWA said: “We have been clear that the removal of the tariffs on both Scotch and American whiskies should be the highest priority for governments on both sides of the Atlantic.

“We continue to urge all parties to get round the table and agree to de-escalate these trade disputes, which are damaging unrelated sectors.”

Trade wars and whisk(e)y tariffs have dominated headlines this year, ignited by US president Donald Trump’s introduction of tariffs on metal imports.

As a result, nations including Canada, Mexico, China and the EU imposed their own tariffs on US goods – and they all targeted American whiskey.

While Canada, Mexico and the US have agreed a truce on tariffs, the EU and China are still at loggerheads with the US regarding tariffs.

Jack Daniel’s owner Brown-Forman said tariff pressures “negatively impacted” the firm’s growth during its 2019 fiscal year, despite a 2% net sales increase.

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